MUMBAI: Ambit Capital has revised its Sensex target upwards to 23,000 and expects the benchmark to achieve it by March 2014.

The brokerage expects the economic reforms announced in September 2012 and the series of reforms likely to be announced in October to facilitate a cyclical recovery. It has maintained its FY13 GDP forecast and sees cyclical upturn in FY14.

"Whilst we expect GDP growth in India in FY13 to be recorded at 6.3 per cent YoY, GDP growth in FY14 is likely to record a cyclical upturn at 7.1 per cent Y-o-Y assuming normal monsoons, a marginally lower crisis factor than prevailing in FY13, and a jump in Central government revenue expenditure in a pre-election financial year," the report said.

Ambit Capital has reiterated its FY13 Sensex EPS forecast of Rs 1,229 and based on both top down and bottom-up estimates, it sees FY14 Sensex EPS to be at Rs 1,350, a 10 per cent growth compared to its FY13 estimate of Rs 1,229.

"Applying a P/E multiple of 17x (which is in-line with historical averages) to our FY14 EPS of Rs 1,350 gives us a March 2014 Sensex target of 23,000 (implying 23% upside from the current level," the report added.

It is of the view the Indian equities may witness panic buying for over a month due thanks to those who were caught on the wrong foot by the Indian government's appetite for reform. However, the market may consolidate in late November-December during the winter session of Parliament.

However, analysts at Ambit are of the view that the rally in Indian equities is not likely to be a linear affair as concerns like Corporate India's balance sheets which are in bad shape and the banking sector's dysfunctional loans will be major retardants to a strong economic recovery in FY14.

The government's disinvestment program and fund raising by corporates are also likely to reduce the upside available at the index level in FY13 and the moves by opposition parties to corner the government may also dishearten some investors.